Recently, I could not believe what one of my clients was complaining about. He was upset about how much his insurance premium had increased. I was even more shocked when he told me that the last time he had shopped for insurance was sixteen years ago!
This got me thinking about how many of my other clients have not shopped for insurance. Please note, I am not an insurance broker, nor do I have any relationship with an insurance company. I am just a small business consultant who specializes in growing your business, sales and marketing.
I reached out to my clients and was shocked at how many other clients did not even remember when they had last shopped for insurance. The responses I received are the reason for writing this article. Insurance costs, if you add them all up, (medical, business liability policies, life insurance, key man insurance, etc.), are a pretty significant cost to a small business and the market changes regularly. Here are some ideas to implement:
What insurance does a small business really need? Your insurance needs will change as your business grows or there is a change in your personal situation, such as a new baby, adding a partner etc. Therefore, you need to call in your local insurance broker and discuss what is necessary. Search the web for “business owner’s insurance coverage”. You will find a check- list for what a small business owner will need.
1. Establish what you need. After you have checked online, talked to at least two brokers and reviewed all the suggestions and their options with your accountant, establish what you need as far as coverage. A good source to determine what you may need is your trade and/or professional association. Go online and check out the Institute for Insurance and Home Safety www.ibhs.org/ and the Small Business Administration www.sba.gov.
2. Price it out. Depending on your situation, you or one of your key administrative employees can get RFQ (request for quotes) from at least two local insurance brokers, your trade and professional association and online resources. Your key administrator should be able to put together a spreadsheet so you can easily review and make decisions. My suggestion is to get many of your policies to renew at similar times as it will be beneficial in getting the lowest quotes. It will also make the annual review easier and faster.
3. Before you sign. Check out the financial rating of the insurance company by checking the Better Business Bureau to see if there are any cases pending against the insurance company. If you are going to use an insurance broker, check them out with the Better Business Bureau also.
4. Payable to whom? We have seen in the news that there are many scams out there. I recommend that you make the checks out to the insurance company directly and not to a broker online or in your local community.
5. Compare regularly. Now that you have the insurance you need, don’t forget to get quotes yearly. This is a simple process and will save you money each year. That is why you want the renewal dates to be as close together as possible. You do not want to spend each month going through this process.
Insurance is a significant cost to your business and it is one of the things you cannot go without, but it is one of the things you need to price compare regularly. After you know what you need and what you can afford, it is easy to maintain. Just don’t wait sixteen years between comparisons!
This insurance review is an integral part of my e-book, Small Business Owners; Annual Financial and Business Checkup. This will be published in November. If you would like to receive a free copy when it is available, please sign up for the e-book now.
Thank you and have a great day!